Posts tagged: Idaho taxes
Idaho’s economic performance is declining on the heels of a “dramatic erosion in resources” due to tax policy changes and falling investments in K-12 and higher education, according to a new report from the Idaho Center for Fiscal Policy. The report notes that Idaho’s per-capita income is lower than all but one state, Mississippi; its low- and moderate-income residents pay a larger share of their incomes in taxes than do higher earners; per-student school funding is down 16 percent since 2008 in inflation-adjusted figures, while higher-ed funding per student is down 37 percent; and Idaho ranks 31 percent below the national average for tax collections and 41st in the nation for tax collections relative to income levels.
“While Idaho has never been a high-income state, our sharp downward trend in economic performance is alarming,” said Lauren Necochea, director of the center.
Jasper LiCalzi, chairman of the Department of Political Economy at the College of Idaho, said, “Reduced funding for education, both primary and secondary, depresses per capita income, which, along with a regressive system of taxation, reduces tax receipts for the state. These problems cannot be resolved in isolation but only together.” You can read the full report here.
The Idaho Center for Fiscal Policy is funded by the Northwest Area Foundation and was opened by former longtime state chief economist Mike Ferguson in 2011; Ferguson retired from the center June 30, and Necochea, who also heads Idaho KIDSCOUNT, took over. Necochea said the latest report, headed, “Six Key Facts About Idaho’s Revenue Shortage and Our Declining Economic Performance,” was designed to sum up information examined in larger reports by the center “in a way that was concise and easy to digest.”
Both the Idaho Center for Fiscal Policy and Idaho KIDSCOUNT are programs housed at Mountain States Group Inc., a 501c3 nonprofit. Necochea is a native Idahoan who studied economics at Pomona College and earned her master’s degree in public affairs at Princeton. Ferguson called her “ideally suited” to taking over the center. Though Ferguson no longer has an official role with the center, Necochea said, “Mike is a dear friend and we’re still talking to him frequently.”
Idaho has set the maximum homeowner's exemption from property tax for next year: It will decline from the current $83,974 to $81,000. “The decrease is smaller than last year’s,” said Alan Dornfest, property tax policy supervisor for the Tax Commission. “This reflects the fact that housing prices trended downward, but at a slower pace than last year.”
The exemption, which is for 50 percent of the assessed value up to the maximum amount, was $50,000 from 1983 to 2006, when it was increased to $75,000 and tied to housing prices. That caused it to hit a high of $104,471 in 2009, after the state's housing prices soared, but to decline back down as prices collapsed.
Idaho's former longtime chief state economist, Mike Ferguson, has released a 20-page report on public school funding that reaches a series of startling conclusions: Public school funding, as a share of total state spending, has dropped dramatically since 2000. Even as state lawmakers in 2006 eliminated the key property tax levy for school operations while raising the state's sales tax by a penny, schools that saw decreasing state funding have turned increasingly to property tax levies, which, unlike the levy eliminated in 2006, are no longer “equalized” with state funding and accentuate disparities in wealth among the state's school districts. The result: Idaho's current school funding system may be violating two key provisions of the state Constitution, requiring the Legislature to “establish and maintain a general, uniform and thorough system of public, free common schools” and requiring taxes to be imposed uniformly. You can read my full story here at spokesman.com.
“Actions that drive local school districts into making dramatic increases in the use of local property tax resources … raise serious doubt that the Legislature is fulfilling its Constitutional obligations,” Ferguson wrote. “It is probably not realistic to expect a quick fix. It is reasonable to expect an open and honest discussion of the direction of Idaho's public school funding, and whether it is living up to the duties and responsibilities handed down by Idaho's founding fathers. Hopefully this report will contribute to that discussion.”
You can read the full report here; it explores Idaho's public school funding from 1980 to 2013. Among the figures revealed by its analysis: Idaho spent 34 percent of its state spending on public schools, on average, in the 1980s and 1990s; that had dropped to 26 percent by fiscal year 2012. The share of Idaho's personal income that went to schools - which Ferguson describes as Idaho's “funding effort” for schools, or “the share of our aggregate income invested in our children,” dropped from a steady 4.4 percent average in the '80s and '90s, and 4.4 percent in fiscal year 2000, to 3.5 percent in fiscal 2012; in the governor's executive budget for 2013, it fell to 3.4 percent. Ferguson noted that's a 23 percent decline, a change he called “a stunning reduction in the state's commitment to public schools.”
And more than two-thirds of Idaho's school districts now have supplemental property tax levies, which are voter-approved local taxes that raise sharply varying amounts from one district to the next, depending on the local tax base. Even after the elimination of the major operations levy in 2006, “Considerable amounts of public school funding are still derived from property taxes, and the relative share is once again increasing,” he wrote.
Ferguson is now director of the Idaho Center for Fiscal Policy, a non-profit, non-partisan grant-funded organization whose mission is “to provide Idaho citizens and elected officials with fact-based information and analysis they can use to make informed public policy decisions.”
The state Tax Commission has set the maximum homeowner's exemption from property taxes for 2012, and it's dropping again, this time down to $83,974. That's down from $92,040 this year. The exemption is tied to the Idaho Home Price Index, so it goes up and down with Idaho home values, under a 2006 law. The maximum exemption hit a high of $104,471 in 2009, then began declining as Idaho home values dropped.
The homeowner's exemption exempts 50 percent of the value of an owner-occupied home from property taxes, but it's capped at the annually-adjusted maximum. That maximum was set at a fixed $50,000 for 23 years, from 1983 to 2005 - causing a big property tax shift onto homeowners as home values escalated but the exemption stayed the same - before the 2006 Legislature decided to raise it to $75,000 and tie it to future ups and downs in home prices.
The drop in the maximum from 2011 to 2012 won't make any difference for owners of lower-priced homes, according to Alan Dornfest, property tax policy supervisor for the Tax Commission, who noted, “There will be no change in the amount of the homeowner’s exemption for anyone whose home has a 2012 market value under $167,948.” Click below for the Tax Commission's full announcement and a table showing changes in the maximum exemption over the years.
Here's a news item from the Associated Press: BOISE, Idaho (AP) — A consortium of Idaho business people have resurrected a failed idea from the 2008 Legislature that for many still holds the allure of helping communities address local needs while boosting their economies: Letting residents vote to tax themselves to expand public transit or build roads. Former Albertsons Inc. Chief Executive Officer Gary Michael, property manager Skip Oppenheimer and Republican consultant Jason Lehosit are among those mulling a 2012 ballot initiative on local option sales tax authority. Three years ago, legislation died after Gov. C.L. “Butch” Otter and House GOP lawmakers insisted on constitutional restrictions that proponents couldn't live with. Michael says the idea re-emerged during informal talks over giving local governments new financing tools. Foes from 2008 like House Majority Leader Mike Moyle fear it's another way to hike taxes.
Key lawmakers are splashing cold water on a tea party-backed proposal to extend Idaho's sales tax to cover most services, while also lowering the rate from 6 percent to 4 percent. “I don't know whether that particular piece of legislation will ever materialize,” House Tax Chairman Dennis Lake said at yesterday's AP Legislative Preview. “The amount of tax collected is exactly the same. All it does is lower the rate.”
But, he said, “As soon as that rate is lowered, there will be an immediate push to raise the rate for whatever reason, and it will be right back up to 6 percent in a few years.” Lake said, “What we found is there is a comfort level in the state of Idaho with a 6 percent sales tax. There is not a comfort level with 7 percent, I can tell you that.”
Other top lawmakers also were critical of the idea, saying it would hurt a section of Idaho's economy at a time when businesses are saying they want stability in the state's tax structure. Twin Falls Times-News reporter Ben Botkin interviewed Rep. Janice McGeachin, R-Idaho Falls, about the proposal earlier; you can read his full story here.
Idaho’s overall tax burden, per capita, is the sixth-lowest in the country and the lowest among western states, the Idaho Tax Commission says. That’s the result of its latest tax burden study, which showed significant impact from the 2006 legislation that lowered Idaho’s property tax, although it also increased the state’s sales tax. The study showed that Idaho’s tax burden is 29.5 percent below the national average, the lowest it’s been compared to the national average since similar studies started 22 years ago. Click below to read the full news release from the Tax Commission.
When Idaho lawmakers raised the homeowner’s exemption from property tax from a maximum of $50,000 to a maximum of $75,000 in 2006, they also tied future changes in the exemption to the Idaho Housing Price Index, which tracks home prices in Idaho. That’s meant it’s gone up substantially in the last few years, hitting a maximum of $104,471 this year - but it also means it’ll go down next year. The Idaho Tax Commission announced today that the maximum homeowner’s exemption 2010 will drop to $101,153.
“The decrease reflects the current state of the real estate market for residential property,” said Alan Dornfest, property tax policy supervisor for the Tax Commission. The homeowner’s exemption exempts from taxes half the assessed value of the home and up to one acre of land for an owner-occupied home, up to the maximum value. The maximum was first set at $10,000 in 1980, then raised to $50,000 by voter initiative in 1983, where it stayed until 2006.
Dornfest noted that the decrease for 2010 isn’t unexpected; according to Tax Commission figures, residential property values already have dropped across the state. “It’s hard to say how much effect this really has, because if it tracks along with your home’s assessed value going down, it may have no effect,” Dornfest noted. “That’s impossible to say (now), because it’s dependent on the 2010 values.” The first tax bill to be affected by the change will be the one that comes due in December of 2010, he noted. “The intent of the Legislature, I think, was to keep it level, basically, with respect to market changes, and I think this just reflects that.”